Has the notebook-to-handheld conversion begun?

It's hard to believe, but there's a high-tech company that got rid of its notebooks.

The company's CEO, tired of the expenses involved in buying and supporting notebooks, took them all away and gave the 700-plus employees desktops and "smart" handhelds, said Al Delattre, a partner in the communications and high-tech practice at Accenture, which worked with the unidentified company on the transition.

"They loved it," he said. "You give a senior executive a laptop, and they generally only use three applications: e-mail, a browser and IM."

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What's new:Though notebook sales are currently driving the PC market, evidence is beginning to mount that smart phones, the BlackBerry and other handheld devices are starting to displace laptops, at least in the pockets of the corporate world.

Bottom line:The push behind the trend comes from the confluence of several factors. Handhelds have become more sophisticated and can handle most basic tasks. Laptops are pricier and need to be replaced fairly often. People have gotten used to taking care of business on handhelds.

A dozen other companies are in the midst of a similar conversion, or contemplating it, Delattre added.

Though notebook sales are currently driving the PC market, evidence is beginning to mount that one of the most repeated predictions from the '90s is starting to come true. Smart phones, the BlackBerry and other handheld devices that combine computer applications, Internet connectivity and a phone are starting to displace laptops, at least in the pockets of the corporate world.

Shipments of smart handhelds pale in comparison to those of notebooks (roughly 60 million annually) or cell phones (more than 700 million worldwide), but they're growing fast. Market researcher Canalys said 12.2 million devices that could be classified as smart phones shipped in the second quarter, more than double the 5.9 million shipped in the same quarter a year ago. The market leaders, in order, are Nokia, Palm and Research In Motion.

The push behind the trend comes from the confluence of several factors favorable to handhelds. First, the devices themselves and the data networks that carry traffic are far more sophisticated than they were several years ago. Corporate applications such as databases and customer relationship management (CRM) software can also be accessed through handhelds.

"I don't carry a laptop anymore because my phone is sophisticated enough," said David Kelley, one of the founders of the design firm Ideo and a professor at the Stanford University Institute of Design.

Then there's the cost side of the equation. Corporate laptops generally run about $1,000 to $1,500, that's higher than a desktop ($700) or a handheld ($300 to $500), particularly if the carrier subsidizes the handheld. Support and management costs can be less for laptops, but "the notebooks get beat up a lot," said Roger Kay, president of Endpoint Technologies Associates, who says Wall Street traders have already begun to convert. "As a usage model, it makes a lot of sense. For certain kinds of users--power users--they want the best PC experience, which is a desktop. And they want mobility."

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Because of the wear and tear laptops go through, the replacement cycle for notebooks can run about two years, more frequent than the three- to four-year replacement cycle of desktops.

Another cost-related perk regarding smart handhelds stems from the fact that the devices also have phones. Because of that, random expense reports for cell phone calls drop.

Finally, individual behavior has begun to change. The once alien clickety-clack of the BlackBerry keyboard has become commonplace. Watch people on planes, Delattre said. They type away furiously on handhelds until takeoff. Then, in flight, they take out their laptops to watch movies.

"You are getting less functionality in a smaller package," Delattre said. "The BlackBerry has become a business tool, and the laptop has become an entertainment device."

Intel, which makes chips for notebooks but also the less-expensive chips for handhelds, says notebooks are here to stay.

Of the 200 million PCs that will ship this year, about 30 percent will be notebooks, according to market researcher Gartner.

Additionally, notebook manufacturers have continued to improve their products by increasing battery life, expanding screens and dropping weight. And some functions--such as reading Web pages--scream for a big screen.

"I could see (smart handhelds) for a subset of users. But for the vast majority of customers, the notebook is going to be it," said Keith Kresslin, director of mobile platforms marketing at Intel.

Delattre added that smart handhelds aren't appropriate for everyone. Someone who needs to carry a big screen--a graphic artist, for instance--or someone who must type long memos will likely need a laptop.

Demand for the big screen, however, can be circumvented. Some of the companies that have converted to handhelds have given memory cards or USB memory devices to their sales reps for PowerPoint slides and other documentation. When on a customer call, the rep just needs to insert the memory card and connect to a screen at the customer's office.

"The big barrier is the imagination of the users on how to add value," Delattre said.

Discuss: Has the notebook-to-handheld conversion begun?

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